4452:JPN - Embedded Expectations Analysis - 2018 10 22
Kao Corporation (4452:JPN) currently trades well above corporate averages relative to UAFRS-based (Uniform) Earnings, with a 34.6x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about their 2018 initiatives, volatility in their baby diaper business, and their ability to improve their Human Health Care SegmentSpecifically, management appears concerned that they are not making progress on various 2018 initiatives. Additionally, they may lack confidence in their ability to maintain improved operating income growth, and may be exaggerating the impact that headwinds in the Fabric and Hair Care segments had on their poor sales growth
Moreover, they may be concerned about volatility in their baby diaper business, and may lack confidence in their ability to improve the performance of their Human Health Care segment. Also, they may be concerned about their shift from TV commercials to digital media advertisement, and about their ability to market their healthy beverages. Lastly, they may lack confidence in their ability to sustain growth in their Bioré, and Pyuora product lines in Asia, and strong performance in their Laurier product line in Japan
Kao is engaged in the manufacture and sale of consumer products, cosmetics and industrial chemical products. Co.'s principal products include cosmetics, soaps, facial cleansers, body cleansers, shampoos, conditioners, hair styling products, hair coloring agents, beverages, sanitary napkins, baby diapers, bath additives, oral care products, laundry detergents, fabric treatments, cleaning products, and commercial-use products. Co. also provides fatty alcohols, fatty amines, fatty acids, glycerin, commercial-use edible fats and oils, surfactant, plastics additives, toner and toner binder for copiers and printers, ink and colorants for ink-jet printers, fragrances and aroma chemicals.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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